WASHINGTON, July 26 (Reuters) - A proposed rule on mercury,
a pollutant bad for fish and the people who eat too many of
them, could help the Obama administration get near its
short-term climate goal -- even if Congress fails this year or
next to pass a bill tackling greenhouse gases directly.

Senate Democrats crafting an energy bill have abandoned
until September, and probably through the rest of the year,
debate on climate measures like carbon caps on power plants and
mandates for utilities to produce more power from renewable
sources like wind and solar.

But while many people concerned about climate control have
been focusing on the Senate, the Environmental Protection Agency
(EPA), under its Administrator Lisa Jackson, has been quietly
preparing to crack down on coal, the most carbon-intensive fuel,
like never before.

Under Jackson, a former chemical engineer for an oil company
who says the idea that progress on environment has to hurt the
economy is a "false choice," the agency late last year declared
that greenhouse gases endanger human health and welfare.

The EPA has begun to take steps on regulating greenhouse
gases from autos, power plants and factories.

But it is the agency's looming rules on mainstream
pollutants, those that can cause diseases, that may limit carbon
dioxide emissions the most.

While the EPA is considering a raft of new rules surrounding
coal, its upcoming rule on emissions of mercury, which go up
smokestacks at coal-fired power plants and enter the ecosystem,
could pack the biggest punch.

The rule, which the EPA was forced by court to issue by
November 2011, will likely help escort many of the oldest and
dirtiest emitters of carbon into early retirement.

Environmental groups and a nurses' group sued the EPA to
issue the rules.

MERCURY ACCUMULATES IN FISH

That is because scientists say mercury from coal accumulates
in many fish. Children and babies exposed to the metal, through
mother's milk or eating contaminated fish, are at risk of
learning and developmental problems. Adults who eat too many of
the fish also face risks.

The EPA would likely have to start enforcing the rules three
years after issuing them.

When combined with the EPA's other current and coming rules
on "criteria" pollutants, like ones that cause acid rain and
smog, the mercury measure would force utilities to invest tens
of millions of dollars on technologies to remove the substances.

Many of those plants are about 50 years old and are already
inefficient.

"Those investments are just not going to be justifiable,"
said Dan Bakal, director of electric power programs at Ceres, a
group of environmentalists and institutional investors.

Francois Broquin, a co-author of reports on coal by
Bernstein Research, said the combined rules could push as much
as 20 percent of U.S. coal-fired electric generation capacity to
retire by 2015. "Obviously that will have an impact," he said.

Frank O'Donnell, the president of the environmental group
Clean Air Watch, said that if a large chunk of the coal-fired
power fleet went into retirement it could help the country
exceed Obama's goal of reducing greenhouse gas emissions by
about 17 percent from 2005 levels by 2020.

"We've thought for a long time that proper enforcement of
the Clean Air Act, laws already on the books, can have the
unintended benefit of really doing something on climate," he
said.

The environmental think tank the World Resources Institute
said on Friday that aggressive action on existing federal
government rules and state plans could reduce emissions almost
as much as Obama wants by 2020. But it said implementation of
the looming mercury and other rules could get even closer.

Utilities would likely build plants to burn natural gas,
which emits half the carbon that coal does, as the main
alternative. Alternative energy like wind and solar power, which
provided the most new U.S. electricity capacity last year, could
also become more attractive to utilities.

To be sure, the rate of retirements may also depend on the
price of natural gas, which is relatively cheap now as new
drilling technologies have granted access to vast new supplies.

In addition, coal companies and utilities could sue to stop
or delay the rules from being implemented.

But several utilities, including Duke Energy, have already
announced plans to shut coal plants.

They know the EPA is also considering rules such as
regulating coal ash waste after a dike ruptured in 2008 at a
Tennessee Valley Authority coal plant, unleashing a slurry gush
that flattened houses. The disaster could take up to $900
million to clean up.

Additional rules on chemicals that cause smog would add new
costs either to comply with or fight in court.

EPA rules alone would not get to the huge reductions of 80
percent of greenhouse gases by 2050 that scientists say are
required to stop the world from suffering the worst effects of
climate change. Ultimately Congress would have to form a
national rule to achieve those cuts.

Until that happens, the EPA rules could serve as a bridge.

"These rules are not going to get all the way (to Obama's
2020 goal) but they are a first and important step," Bernstein
Research's Broquin said.
(Reporting by Timothy Gardner, editing by Anthony Barker)